US Blue Chips Rise While S&P 500, Nasdaq Wobble Ahead Of Weekend

DonnaKardos

NEW YORK (MarketWatch) -- U.S. blue-chip stocks climbed to fresh 2 1/2-year intraday highs Friday, but other market measures wobbled as investors exercised caution ahead of a holiday that will keep U.S. markets closed until Tuesday.

The Dow Jones Industrial Average rose 51 points, or 0.4%, to 12370, after reaching its highest intraday level since June 2008 at 12375.02. Among the measure's top performers, Caterpillar added 1.9% and Travelers rose 1.6%.

Chevron was also strong, up 1.4%, after a U.S. judge delayed a decision on whether to grant an injunction prohibiting the enforcement of $8.6 billion judgment against the oil giant over environmental damage in Ecuador's Amazon region.

The Nasdaq Composite fell 0.1% to 2828. The Standard & Poor's 500 index shed less than a point, with gains in its energy sector offset by declines in materials and technology stocks.

The materials sector, which gets much of its demand from China, fell as China's central bank said it will raise banks' reserve-requirement ratio by half a percentage point, the second increase this year to withdraw excess liquidity from the economy and curb inflation.

The technology sector was weighed down by a 5.4% drop in JDS Uniphase. Citigroup cut its investment rating on the stock to "hold" from "buy," saying the shares are "likely to take a breather following massive outperformance" lately. The firm said the downgrade is "driven by stock price concerns rather than underlying trends."

Declines across other technology stocks came as investors worried that they also may be getting overheated following strong gains recently. Advanced Micro Devices fell 2.7% and Apple dropped 2.4%.

"If you look at how some of these tech names have done and the runs they've had, people look at these stock prices and they get spooked," said Timothy Holland, portfolio manager of the Aston/TAMRO Diversified Equity Fund. Investors are thinking "if it happens to one high-profile tech stock, it can clearly sort of move across the sector," he added.

Friday marks the final session of the U.S. stock market's third-straight week in the black, which is also the DJIA's 11th positive week out of the past 12 weeks.

U.S. stocks had been up higher earlier in Friday's session, but the gains pared as the long weekend neared. Investors pulled back heading into the three-day weekend, especially with a Group of 20 meeting going on in Paris and while the unrest in the Middle East continues.

At the G-20 meeting, the group of industrial and developing nations appeared headed toward an agreement on setting four indicators as guidelines for measuring global economic imbalances, according to senior G-20 officials. Also, Federal Reserve Chairman Ben Bernanke offered his most pointed rebuttal yet to foreign critics who say the U.S. central bank's easy-money policies are causing inflation and asset bubbles abroad.

In the Middle East, Bahraini protesters said security services opened fire on demonstrators as they marched toward the capital's Pearl roundabout, dramatically escalating the standoff between the country's Sunni Muslim rulers and its Shiite majority population. The turmoil helped lift crude-oil futures above $89 a barrel.

"With some of what's going on over there, what are the odds that no major news item comes out of the Middle East for the next 4 days?" said Dan Genter, chief executive and chief investment officer of RNC Genter Capital Management, noting that traders won't be able to act on any of this weekend's events until Tuesday.

"People are in a position where people don't want to be long, they don't want to be extended, especially extremely extended on margin, going into this type of weekend. They're going to want to take a step backward."

The euro rallied against the dollar, climbing to $1.3706 after some hawkish comments from European Central Bank executive board member Lorenzo Bini Smaghi. The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, fell 0.4%.

U.S. Treasurys were mixed, with gains in the two-year note pushing its yield down to 0.76%, while lower demand for the 10-year note lifted its yield up to 3.59%. Gold futures climbed.

Among stocks in focus, Campbell Soup fell 4.7%, after the company cut its earnings outlook for its current fiscal year amid heated competition for soups, sauces and drinks. The lowered guidance comes after Campbell reported a 7.7% decline in fiscal second-quarter earnings as more promotions again failed to boost soup sales. Revenue missed analysts' expectations.

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